#SFSW15: Inside the Local Services Land Grab

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The local service industry has exploded in recent years as investors pour billion into companies creating new ways for consumer to transact with plumbers, painters and other service professionals. But even today, service professionals still rely mostly on word of mouth to find leads and get new jobs.

During a session at Street Fight Summit West in San Francisco Tuesday, the chief executives of two of the hottest new services startups — Thumbtack and Pro.com — discussed the dynamics of navigating the quickly changing local services sector. Thumbtack, which raised $100 million last year, has created a reverse marketplace for service providers, and Pro.com, a Seattle startup headed up by former Digg CEO Matt Williams, has aggregated pricing data from thousands of service professionals across the country.

For the consumer these online service agencies can be time saving when looking for a caterer for a wedding, or a plumber for the drains, by connecting these customers directly to local professionals. During the session, Williams described the added benefits to consumers that comes through the convenience of getting an instant quote online through Pro.com. This quote might even come bundled with pertinent data about the frequency in which a professional has conducted similar repairs or services needed by the consumers.

Monetizing these online referral companies is a challenge, and can be done through listing and consumer subscriptions, and potentially even by implementing a commission base, said Williams.  However as these sites ultimately develop, both Williams and Thumbtack CEO Marco Zappacosta agree that it remains to be seen how their own agencies will expand in the coming years while trying to meet the needs of consumers.

But for Williams, the end game is not to disrupt the service business the way Uber competes with taxis. Instead, he believes that the real potential for his firm is to bring professionals and consumers together while instilling trust through listing professionals who are appropriately insured and bonded in their particular fields of expertise.

The questions remain is whether these online referral systems work? And what makes these online referral agencies better than their predecessors?

One answer comes through the reality that today consumers look to their smart devices, their phones, and the web to find the service professionals they need in their area.  These same service providers need clients, and because these clients need help the companies will succeed. This is an age-old market that is constantly reinventing itself and both Williams and Zappacosta agree that the potential for online growth is evident, and these companies are likely to expand in unexpected ways in the future.